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Table of Contents

PREFACE viiFOREWORD xi

PART I FOUNDATIONS 1

CHAPTER 1 Information Systems and the Role of General and Functional Managers 3

Introduction 5

General and Functional Managers 6

General and Functional Managers versus End Users 9

The Next Wave of CIOs 10

Fundamental IT Trends: The Staying Power of Moore’s Law 12

Processing Power and Memory Increase 13

Costs of Computing Power Decline 14

Computers Have Become Easier to Use 16

Other IT Trends of Managerial Interest 16

Declining Storage Costs 17

Ubiquitous Network Access 17

Ubiquitous Computing and Digital Data Genesis 17

How Do These Trends Affect Today’s Managers? 21

Why Can’t We Just Hire Good IT People? 22

Summary 23

Study Questions 23

Further Readings 24

Glossary 24

CHAPTER 2 Information Systems Defined 25

Introduction 26

Information Systems: Definition 27

IS, Not IT 27

Information Systems as Sociotechnical Systems 28

The Four Components of an Information System 29

Systemic Effects 32

Why Do Organizations Build Information Systems? 33

Successful Information Systems 34

Information Systems Outcomes 38

Information Systems in the Organizational Context 39

Every Organization is Unique 39

Bringing It All Together 40

Information Systems and Organizational Change 41

First-Order Change: Automate 41

Second-Order Change: Informate 42

Third-Order Change: Transform 43

Culture and Information Systems 45

National Culture 45

Organizational Culture and National Culture 46

How Culture Impacts Structure 47

Implications 49

Don’t Put the Cart before the Horse 49

The Rock in the Pond 50

Information Systems Are in Flux 50

Conclusion 51

Summary 51

Study Questions 51

Further Readings 52

Glossary 52

CHAPTER 3 Organizational Information Systems and Their Impact 53

Introduction 54

Categorizing Systems 55

Hierarchical Perspective 55

Functional Perspective 59

Process Perspective 60

The Information System Cycle 64

The Integration Imperative 65

Defining Integration 65

The Dimensions of Integration 65

Enterprise Systems 68

The Genesis of Enterprise Systems 68

Enterprise Systems: Definition 70

The Advantages of Enterprise Systems 73

The Limitations of Enterprise Systems 74

Supply Chain Management 78

A Brief History of Supply Chain Management 79

Modern Supply Chain Management 80

Knowledge Management 82

Knowledge: Definition 82

Knowledge Management: Definition 84

Business Intelligence 85

Business Intelligence: Definition 87

Components of the Business Intelligence Infrastructure 88

The Evolution of Business Intelligence 91

Customer Relationship Management 92

Aspects of CRM 92

The Limitations of CRM 94

Best-of-Breed Integration 94

Enterprise Application Integration (EAI) 95

Ultimate Flexibility: Service-Oriented Architecture 95

Integration: Concluding Remarks 97

Summary 98

Study Questions 99

Further Readings 99

Glossary 100

PART II COMPETING IN THE INTERNET AGE 103

CHAPTER 4 The Changing Competitive Environment 105

Introduction 106

Network Economics 107

Networks Are Different: Value in Plentitude 108

Physical and Virtual Networks 108

Key Concepts and Vocabulary 110

Two-Sided Networks 118

Implications for General and Functional Managers 118

The Economics of Information 121

Data and Information 122

Classic Information Goods 122

The Economic Characteristics of Information 123

Implications 127

Information-Intensive Goods 128

Information in Networks 130

The Richness and Reach Trade-Off 131

Implications 133

Obstacles 135

The Internet Changes Everything? 137

A Note about Disruptive Technology 138

Sustaining Technology 138

Disruptive Technology 139

Implications for Managers 140

What to Do? 141

Summary 142

Study Questions 143

Further Readings 143

Glossary 143

CHAPTER 5 Electronic Commerce: New Ways of Doing Business 145

Introduction 148

The Internet 148

Internet Services 150

Distributed Ownership 150

Multiplicity of Devices 151

Open Standards 152

The Network, More than the Internet of Today 152

The eCommerce Vocabulary 154

eCommerce and eBusiness 155

The Enablers 155

Categorizing Electronic Commerce Initiatives 156

Manifestations of eCommerce and eBusiness 162

Business Models: Definition 162

Dominant Business Models 166

The Implications of eCommerce 170

Disintermediation 170

Reintermediation 171

Market Efficiency 171

Channel Conflict 171

Customer and Employee Self-Service 173

eCommerce: From Novelty to the Mainstream 173

The Web 2.0 Phenomenon 174

Web 2.0 Technologies 178

Web 2.0 and Business Innovation 183

Summary 185

Study Questions 185

Further Readings 186

Glossary 186

PART III THE STRATEGIC USE OF INFORMATION SYSTEMS 187

CHAPTER 6 Strategic Information Systems Planning 189

Introduction 190

A Word About Strategic and Operational Planning 191

Strategic Alignment 191

Six Decisions Requiring Managerial Involvement 193

The Purpose of Strategic Information Systems Planning 195

Plans Enable Communication 195

Plans Enable Unity of Purpose 196

Plans Simplify Decision Making over Time 196

The Strategic Information Systems Planning Process 196

Know Who You Are: Strategic Business Planning 197

Know Where You Start: Information Systems Assessment 197

Know Where You Want to Go: Information Systems Vision 199

Know How You Are Going to Get There: Information Systems Guidelines 204

Know How Well-Equipped You Are to Get There: Information Systems SWOT 208

From Planning to Action: Proposed Strategic Initiatives 209

Summary 209

Study Questions 210

Further Readings 210

Glossary 210

CHAPTER 7 Value Creation and Strategic Information Systems 211

Introduction 212

The Analysis of Added Value 213

The Benefits of Disciplined Analysis 214

The Definition of Value 214

Defining the Components of Value Created 215

Computing the Total Value Created 216

Appropriating the Value Created 218

The Definition of Added Value 219

Added Value in a Competitive Market 220

Pricing Considerations 220

The Relationship between Added Value and Competitive Advantage 221

How Is Added Value Created? 221

Two Ways to Create New Value 222

Some Considerations About the Analysis of Added Value 223

Strategic Information Systems 225

Definition: Strategic Information Systems 225

IT-Dependent Strategic Initiatives 227

Summary 229

Study Questions 230

Further Readings 230

Glossary 230

CHAPTER 8 Value Creation with Information Systems 232

Introduction 235

Traditional Models of Value Creation with IT 235

Industry Analysis 235

Value Chain 240

Customer Service Life Cycle 244

Traditional Models, Not “Old” Models 252

Emerging Frameworks 252

Virtual Value Chain 253

Value Creation with Customer Data 259

Crafting Data-Driven Strategic Initiatives 267

Conclusions 270

Summary 270

Study Questions 271

Further Readings 271

Glossary 272

CHAPTER 9 Appropriating IT-Enabled Value Over Time 273

Introduction 274

Not All IT is Created Equal 275

High-Speed Internet Access in Hotel Rooms 275

Business Intelligence at Caesars Entertainment 276

The Need for A Priori Analysis 277

Appropriating Value Over Time: Sustainability Framework 277

Sustainable Competitive Advantage 277

Resource Based View 278

Response Lag 279

Four Barriers to Erosion 279

The Holistic Approach 289

The Dynamics of Sustainability 290

Applying the Framework 292

Prerequisite Questions 292

Sustainability Questions 293

What Evolutionary Paths Does the Innovation Create? 295

Making Decisions 296

Develop the IT-Dependent Strategic Initiative Independently 296

Develop the IT-Dependent Strategic Initiative as Part of a Consortium 296

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